By Naomi Tajitsu
WELLINGTON, Sept 9 (Reuters) - The Australian and New Zealand dollars edged up on Wednesday, extending gains as signs of stability in Chinese equity markets prompted investors to creep back into riskier assets, boosting the higher-yielding currencies.
Chinese stocks rose nearly 3 percent on Tuesday after the government took measures to curb speculative activity and bolster markets following a dramatic sell-off in past months.
The Australian dollar rose 0.2 percent to a session high of $0.7039 in early Australasian trade, pulling the currency further away from a 6-1/2-year low of $0.6892 plumbed on Monday.
The kiwi NZD=D4 climbed 0.6 percent to $0.6380, backing off a two-week low of $0.6244 hit earlier in the week.
Analysts said the Antipodean currencies would likely extend their corrective rallies if Chinese share markets continued to recover on Wednesday.
"With Shanghai bouncing so strongly that's really helping risk appetite and we could get a rebound towards $0.7200 in the Aussie, and in the same vein the kiwi could get up near $0.6500 if those gains continue today," BNZ currency strategist Raiko Shareef said.
The Aussie added to its 1.6 percent jump the previous day, when data showing a rise in domestic business conditions also boosted the currency on the view that the country was slowly recovering from weakness in its mining sector.
The kiwi rallied ahead of a monetary policy announcement by the Reserve Bank of New Zealand (RBNZ), which is widely expected to cut its official lending rate on Thursday.
Markets are pricing in another 25 basis point cut to 2.75 percent, while investors were waiting to see if the RBNZ will flag that it may pause its rate cutting cycle as it waits to gauge the impact of a series of rate cuts from 3.5 percent since June.
Some market participants expected that the kiwi may rally towards $0.6500 if the RBNZ suggests it may forgo another cut at its next meeting in October.
Still, some said a climb towards that level would prompt selling, as many in the market expect the kiwi to bump down towards $0.6000 by the end of the year.
New Zealand government bonds eased, pushing yields around 3 basis points higher across the curve.
Australian government bond futures were also softer, with the three-year bond contract down 0.040 at 98.160. The 10-year contract was down 0.0425 at 97.2625.
(Editing by Richard Pullin)